Saul Katz and Fred Wilpon, owners of the New York Mets baseball team, invested in Bernard Madoff’s Ponzi scheme. Irving Picard, the trustee appointed under the Securities Investor Protection Act to liquidate the business of Madoff and Madoff Securities, sought to recover over $1 billion from Katz and Wilpon on the grounds that they had made money from Madoff through fraud, constructive fraud and preferential transfers in violation of federal bankruptcy law and New York debtor-creditor law.

The Canadian Investor Protection Fund, the investment industry’s customer compensation agency, has obtained a bankruptcy order in the Ontario Superior Court against MF Global Canada, the Canadian subsidiary of MF Global Holdings which sought Chapter 11 protection in New York last week. KPMG Inc. has been appointed as trustee in bankruptcy for MF Global Canada.

The Investment Industry Regulatory Organization of Canada, whose dealer members support the CIPF, had previously obtained an order requiring MF Global Canada to cease dealings with the public.

The appeal by an insurer ("Sovereign") was dismissed. The Court found that the notice provided to Sovereign by a co-defendant of the bankrupt insured was sufficient notice in accordance with the policy conditions for liability coverage. In the alternative, that the plaintiffs were entitled to relief from forfeiture.

[2011] O.J. No. 4106

2011 ONCA 597

Ontario Court of Appeal

D.R. O'Connor A.C.J.O., J.I. Laskin and J.C. MacPherson JJ.A.

September 19, 2011

UBS terminated its ISDA Master and FX transactions with Lehman Brothers Inc., was obligated to return about $23 million in collateral, wanted to set-off against that $23 million amounts owing by LBI to UBS affiliates as contemplated by the cross-affiliates set-off provision.

Summary

Generally speaking, the policy of the Bankruptcy and Insolvency Act (“BIA”) is not to interfere with secured creditors, leaving them free to realize upon their security. While this makes sense in the abstract, the question that is most often posed by secured creditors is “what does this mean in a practical sense?  What exactly do I need to do to retrieve my secured asset?”

On August 18, 2011, Mr. Justice Morawetz, of the Ontario Superior Court of Justice, released an important decision in regard to preference actions in the matter of Tucker v. Aero Inventory (UK) Limited (together with Aero Inventory plc, Aero).

Background

Action for return of premiums paid of key man insurance policies dismissed.

[2011] O.J. No. 3387

Ontario Superior Court of Justice

M.A. Penny J.

January 21, 2011

The appellant insurer sought leave to appeal the order of the Chambers Judge who dismissed it’s application to be added as a party or intervener in an underlying liability action in the Supreme Court of British Columbia.

[2011] B.C.J. No. 1336

2011 BCCA 326

British Columbia Court of Appeal (In Bankruptcy and Insolvency)

P.A. Kirkpatrick J.A. (In Chambers)

July 8, 2011

introduction

In Canada legislative authority is divided between the federal and provincial governments by subject matter. "Bankruptcy and insolvency" is a matter of federal jurisdiction, while "property and civil rights" is generally within the jurisdiction of the provinces.